![]() And when the pandemic spread, a lot of the smaller stores in strip malls got hit hard. Eating out, for example, is one of the first things people cut from their budgets in a recession. The downside is that that smaller stores can be highly economically sensitive. These smaller locations generally pay more per square foot, making them highly profitable. The scale of these businesses can vary from mom-and-pop owners to national chains, but they are a key driver of long-term returns as they benefit from the foot traffic brought in by the anchor tenants. Thus, a key piece of a strip mall's business are the shops that fill in around the anchor, which include everything from hair salons to restaurants. ![]() For example, grocery stores, warehouse clubs, and pharmacies (an even broader subset of reliable tenants) only make up around 18.5% of Kimco's total rent roll. But it's still just a small portion of the overall mall. So grocery stores and other big-draw stores often pay the lowest rents and take up the most space. The only problem is that grocery stores understand the importance they play as reliable tenants. ![]()
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